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Ivanhoe Cambridge’s Daniel Fournier: Real estate titan seeks the next Brazil

Illustration of Daniel Fournier, CEO of Ivanhoe Cambridge, the real estate arm of the Caisse de dépôt et placement du Québec.

ANTHONY JENKINS/The Globe and Mail

I am slightly distracted as I sit down to lunch with Daniel Fournier, the CEO of Ivanhoe Cambridge, one of the 10 largest real estate investors in the world. I've just learned that Jude Law is in a nearby room.

Mr. Fournier and I are at Epic Restaurant in the Royal York Hotel, which is buzzing over the Toronto International Film Festival. Black SUVs are lined up out front, gawkers are milling about, and the occasional entourage-flanked actor passes by. But I can't imagine any of them get better treatment than Mr. Fournier and me. Ivanhoe Cambridge, the real estate arm of Caisse de dépôt et placement du Québec, owns this hotel, a small part of its $35-billion stable of assets, and someone from the firm called ahead to ask for a quiet table where he could be interviewed.

In no time an amuse-bouche appears before us, consisting of cherry tomatoes from the hotel's own garden, marinated with olive oil and accompanied by burrata cheese and crostini. Waiters hang on our every word.

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"The last time I was here I got a club sandwich," quips Mr. Fournier, 59. He may have studied at Princeton and Oxford, but with his friendly demeanour I can't imagine him ever throwing his weight around – except when he played for the Ottawa Rough Riders.

Mr. Fournier and his team at Ivanhoe are still debating whether to sell or refurbish the Royal York, which opened in 1929 and has hosted several functions attended by Queen Elizabeth II. Shortly after taking the helm of the Caisse's real estate arm a few years ago, he decided to sell most of its hotels, something it's been doing since 2011.

"We can't be all things to all people," he says. The company once owned as many as 60 hotels, but Mr. Fournier wants it to concentrate on the property classes it knows best: retail, office and residential.

Ivanhoe Cambridge is invested in more than 60 shopping centres, 170 office properties and a growing portfolio of residential properties, including a large number of apartments in Silicon Valley and London, England.

Although hotels didn't make his short list, the Royal York is one of a few that he's reluctant to part with, along with the Château Frontenac and the Fairmont Hotel Vancouver. "They're phenomenal assets, hugely challenging because the capital required is immense, but you just know that something special could and should happen," he says. "I mean, I look at the Château Frontenac and I just think of Roosevelt, Churchill, and a few others planning out the Second World War."

Mr. Fournier has been a history buff ever since leaving Quebec at the age of 16 with a scholarship to New Hampshire's Phillips Exeter Academy. After Exeter, he went to Princeton and then Oxford. "I had told my mom I'd be back in a few years, and a few years ended up being nine," he says, as the waiter clears his butternut squash soup.

That included a stint in Canada, in 1977, when Mr. Fournier played for the Rough Riders. He had been captain of the team at Princeton, and was subsequently drafted by the Canadian Football League as he was accepted to Oxford. When a fellow student asked for permission to skip a term to be quarterback for the Los Angeles Rams, Mr. Fournier decided to follow his lead. "My law tutor was not very impressed, I can tell you."

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He chose to return to Oxford after one term in Ottawa, but regrets not trying football a little longer to see how it went. Mr. Fournier ultimately returned to Montreal at 25, and within a short time he was hired at Canderel, where he received a crash course in real estate. That gave him "the entrepreneurial bug," which pushed him to form a small company, Equidev. It would take Montreal by storm with a string of local acquisitions, including the Ogilvy department store and the city's Ritz-Carlton. A Globe profile in 1988 noted that Mr. Fournier, who was then 34, Bill Tresham, who was the 33-year-old president of Ogilvy, and their crew were known in town as "the boys." They transformed the once-stuffy Ogilvy "into a showcase of such international fashion superstars as Versace and Valentino," the Globe noted.

Mr. Fournier knew Mr. Tresham from Princeton. Decades later, in 2010, when Caisse CEO Michael Sabia hired Mr. Fournier to run the pension fund's real estate business, Mr. Fournier convinced Mr. Tresham to come on board as Ivanhoe's head of investments.

The two look out for each other. Mr. Tresham spurred Mr. Fournier to run a marathon a number of years ago, when Mr. Fournier had let his physical condition slide a bit.

Mr. Sabia frequently reminds employees at the Caisse that the long-term investment game is a marathon, not a sprint. "Every time he says it, I get the shakes," Mr. Fournier says, laughing at his marathon experience as he tucks into his salmon. "My biggest downfall is food," he says.

Mr. Fournier married in his mid-30s, and the couple had four children in five years. He and his family often spend time at their log cabin about three hours from Montreal. A firm believer in public service, Mr. Fournier ran as a Conservative in the 2006 federal election in the storied riding of Outremont, long a Liberal stronghold. The Liberal candidate held onto the seat.

"His only lapse of judgment in my opinion is he ran as a Tory," said former Ontario Premier David Peterson, a Liberal. "But we laugh about this. He's not partisan in any way, he's a public servant. He's got a wonderful wife and wonderful family, all the beautiful values."

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A couple of years later, Mr. Fournier did a stint at SITQ, one of the Caisse's real estate subsidiaries at the time. "It was right in the middle of the [financial] crisis, I'm the chief investment officer, and it was very clear that there were no acquisitions to speak of for the next couple of years," he says. "That's not my style to go at 40 or 50 per cent of my capacity." He left after a little more than a year, only to be lured back by Mr. Sabia a short time later.

One of Mr. Fournier's first major decisions in his current role was to merge the Caisse's real estate subsidiaries, SITQ and Ivanhoe Cambridge, into one. "We wanted to have one balance sheet, one board," he says, as office and retail deals began to top $1-billion.

He set about putting a new strategy in place, the one that left hotels on the chopping block. Montreal remains key, and the company will be investing in several of its properties there, including the Eaton Centre, Place Montreal Trust, and Complexe Les Ailes. Shopping centres are also key. Ivanhoe owns 42 of them in Canada, which currently attract 290 million visitors a year, and is investing to grow that number.

The U.S., meanwhile, is likely to become a larger component of the portfolio, though Mr. Fournier is cautious. "We've looked at all kinds of retail opportunities in the U.S., but we haven't even come close to finding something," he says.

Ivanhoe is forging ahead in the U.S. office market, though, and recently teamed up with Callahan Capital Partners there. "Again humbly, rather than sending down some Montrealers three days a month to compete against people whose entire careers have only been about New York City, we've formed a partnership," Mr. Fournier says. The company is leaving cities where it owns only one or two properties to concentrate on New York, Seattle, Chicago, Boston and Washington – places where it can establish a critical mass.

The company has spent $2-billion on shopping centres in Brazil that are aimed at the three million people who join the middle class in that country each year. "We're looking hard for the next Brazil," Mr. Fournier says, shortly before he orders a fruit salad.

"In your opinion, is Europe a problem or is Europe an opportunity?" he asks me, clearly leaning toward the second option. Ivanhoe is working on opportunities to buy the debt of beleaguered real estate companies as a way of obtaining assets at a discount, the type of strategy that helped it and private equity firm TPG takeover the Woolgate Exchange office building in London's business district this year.

A dozen cookies, biscotti and macaroons arrive for me even though I declined dessert. As the waiter sets a huge plate of fruit down for Mr. Fournier, he says that one of the reasons he loves history is that it always repeats.

"Our annualized yield over the last 10 years is 12.5 per cent," he says, plucking a macaroon from the plate. "But it would have been out of the park had we bought in 2008 and 2009. So you say to yourself, if anything happens in the next four or five years, try to be in position."

CURRICULUM VITAE

Personal

Grew up in the West End of Montreal, where he lived with his mom and sister. "A very close family, a lot of aunts, uncles, cousins, a partly Irish grandfather who marries a Francophone grandmother who has some of the most unbelievable parties to this day."

Married to Caroline Drouin, whom he met on a blind date. They have four children: two sons, 22 and 18; and two daughters, 20 and 16.

EducationAttended Phillips Exeter Academy, an elite prep school in New Hampshire, on scholarship in 1971.

Bachelor's degree in history from Princeton University in New Jersey.

Bachelor's degree in jurisprudence from Oxford University, Rhodes scholar.

Career

Worked at Canderel

Property Management.

Founded Equidev Inc., which bought Ogilvy in 1985 and Montreal's Ritz-Carlton in 1989.

Chief investment officer at SITQ, from 2008 to 2009.

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